FEES AND COMPENSATION
A. Advisory Fees and Compensation
The Investment Manager is entitled to receive compensation in consideration for advisory
services provided to Clients. While the fees applicable to each Client are described in detail in the
applicable Governing Documents, a summary of the fee structures is included below.
The Investment Manager and the Credit Fund General Partner typically receive
compensation from the Credit Feeder Funds from the following sources: (a) management fees
based on a percentage of the net asset value of the Domestic Fund and the Offshore Fund; and (b)
compensation based on a percentage of the performance of the Domestic Fund and the Intermediate
Fund. The Domestic Fund and the Offshore Funds generally pay the Investment Manager a fee
for investment management service at rates ranging from 0.75% to 2.0% per annum.
The Credit Fund General Partner is generally entitled to an incentive allocation at the end
of each fiscal year from the Domestic Fund and the Intermediate Fund in an amount equal to
between 15% and 30% of the net capital appreciation (including realized and unrealized gains), in
certain cases, above a hurdle or preferred amount.
The CLO Equity General Partner is generally entitled to carried interest from the CLO
Equity Master Fund in an amount equal to 20% of the net capital appreciation of a limited partner’s
contributions to the CLO Equity Funds, in excess of specified performance thresholds.
The Investment Manager is entitled to receive compensation in consideration for collateral
management services provided to the CLO Funds. Such compensation typically consists of a senior
collateral management fee and a subordinated collateral management fee (together, “Collateral
Management Fees”). The Collateral Management Fee is generally equal to a range of 0.2% to
0.5%. per annum of the total assets of such CLO Fund.
Fee terms for advisory services provided to the Managed Accounts are negotiated with the
Clients and memorialized in a separate advisory agreement.
B. Payment of Fees
The Investment Manager and its affiliates deduct fees from certain Clients’ accounts and
bill other Clients for fees, in each case, as provided in the Clients’ Governing Documents. With
respect to fees that are deducted from Client accounts, management fees are generally deducted
on a quarterly basis and the incentive allocation is generally assessed on an annual basis.
C. Additional Fees and Expenses
In addition to the advisory fees and compensation described above, Clients also bear their
own expenses as more fully described in each Client’s applicable offering documents, limited
partnership agreement (or similar agreement), organizational documents, subscription agreement
and investment advisory agreement (each, a “Governing Document”, and collectively, the
“Governing Documents”). The expenses described below are applicable to certain Clients,
however investors should review the applicable Governing Documents for more detailed
information on the applicable expenses that will be charged to such Client.
Each Fund bears its own expenses and its pro rata share of the Intermediate Fund’s (if
applicable) and the Master Fund’s expenses, while the CLO Equity Feeder Funds bears their own
expenses and their pro rata share of the CLO Equity Master Fund’s expenses, including, without
limitation and as applicable, the management fee; investment expenses, whether or not such
investments are consummated (such as brokerage commissions, expenses relating to short sales,
clearing and settlement charges, custodial fees, bank service fees and interest expenses);
investment-related travel expenses (which are travel expenses related to the purchase, sale or
transmittal of, or due diligence regarding, a Fund’s investments, whether or not such investments
are consummated, incurred by the Investment Manager); professional fees (including, without
limitation, expenses of consultants, investment bankers, attorneys, accountants and other experts)
relating to investments; expenses associated with research and brokerage services, including, but
not limited to, reports, information and analyses concerning specific securities, companies or
sectors and market, financial and economic studies and forecasts; fees and expenses relating to
software tools, programs or other technology utilized in managing a Fund (including, without
limitation, third-party software licensing, implementation, data management and recovery services
and custom development costs); research and market data (including, without limitation, any
computer hardware and connectivity hardware (e.g., telephone and fiber optic lines) incorporated
into the cost of obtaining such research and market data); administrative expenses (including,
without limitation, fees and expenses of the administrator); the cost of directors and officers and
errors and omissions liability insurance for the Fund directors, the Investment Manager and the
applicable Fund General Partners; legal fees and related expenses; external accounting and
valuation expenses (including, without limitation, the cost of accounting software packages); audit
and tax preparation and compliance expenses; fees of the members of a Fund’s board of directors
who are not associated with the Investment Manager; costs of providing electronic access to Fund
reports and information and printing and mailing reports and notices; entity-level taxes; corporate
licensing; regulatory expenses (including, without limitation, filing preparation and fees, including
for filings required to be made by the Investment Manager); organizational expenses; expenses
incurred in connection with the offering and sale of the shares or interests and other similar
expenses related to a Fund (other than any fees payable to any placement agent, which are paid by
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